Foreign Investment Reform (Protecting Australia’s National Security) Act 2020 (Cth)

Foreign Investment Reform (Protecting Australia's National Security) Act 2020 No. 114, 2020 Compilation No. 1 Compilation date: 21 September 2021 Registered: 21 September 2021 This compilation only includes an editorial change About this compilation This compilation This is a compilation of the Foreign Investment Reform (Protecting Australia's National Security) Act 2020 that shows the text of the law as amended and in force on 21 September 2021 (the compilation date). The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law. Application, saving and transitional provisions for provisions and amendments If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law. Self‑repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents 1 Short title 2 Commencement 3 Schedules 4 Evaluation of operation of this Act and related legislation 5 Delegation Schedule 1—Main amendments Part 1—Amendment of the Foreign Acquisitions and Takeovers Act 1975 Foreign Acquisitions and Takeovers Act 1975 Part 2—Amendments of other Acts Administrative Appeals Tribunal Act 1975 Security of Critical Infrastructure Act 2018 Taxation Administration Act 1953 Part 3—Application and transitional provisions Division 1—National security reviews and last resort power Division 2—Other amendments Schedule 2—Compliance and enforcement Part 1—Amendments Foreign Acquisitions and Takeovers Act 1975 Part 2—Application provisions Division 1—General Division 2—Application of Regulatory Powers (Standard Provisions) Act 2014 Part 3—Contingent amendments Foreign Acquisitions and Takeovers Act 1975 Schedule 3—Register of Foreign Ownership of Australian Assets Part 1—Amendments Foreign Acquisitions and Takeovers Act 1975 Part 2—Repeals Register of Foreign Ownership of Water or Agricultural Land Act 2015 Part 3—Amendments consequential on repeal Foreign Acquisitions and Takeovers Act 1975 Part 4—Transitional provisions Endnotes Endnote 1—About the endnotes Endnote 2—Abbreviation key Endnote 3—Legislation history Endnote 4—Amendment history Endnote 5—Editorial changes An Act to amend the law relating to foreign acquisitions and takeovers, and for related purposes 1 Short title This Act is the Foreign Investment Reform (Protecting Australia's National Security) Act 2020. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provisions Commencement Date/Details 1. Sections 1 to 5 and anything in this Act not elsewhere covered by this table The day this Act receives the Royal Assent. 10 December 2020 2. Schedule 1 1 January 2021. 1 January 2021 3. Schedule 2, Parts 1 and 2 At the same time as the provisions covered by table item 2. 1 January 2021 4. Schedule 2, Part 3 The later of: 1 September 2021 (a) immediately after the commencement of the provisions covered by table item 2; and (paragraph (b) applies) (b) immediately after the commencement of the Federal Circuit and Family Court of Australia Act 2021. However, the provisions do not commence at all if the event mentioned in paragraph (b) does not occur. 5. Schedule 3, Part 1 Immediately after the commencement of the provisions covered by table item 2. 1 January 2021 6. Schedule 3, Parts 2 and 3 A single day to be fixed by Proclamation. 1 July 2023 However, if the provisions do not commence within the period of 4 years beginning on the day this Act receives the Royal Assent, they commence on the day after the end of that period. (F2023N00178) 7. Schedule 3, Part 4 At the same time as the provisions covered by table item 5. 1 January 2021 Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act. (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act. 3 Schedules Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. 4 Evaluation of operation of this Act and related legislation (1) The Secretary must conduct an evaluation of the reforms implemented by this Act and the Foreign Acquisitions and Takeovers Fees Imposition Amendment Act 2020 (the foreign investment reform Acts), including: (a) legislative instruments made under the Foreign Acquisitions and Takeovers Act 1975 and the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 to implement the foreign investment reform Acts; and (b) administrative changes made to implement the foreign investment reform Acts. (2) The evaluation must start as soon as practicable, and in any event within 1 month, after this section commences. (3) The Secretary must give the Treasurer a written report of the evaluation before the end of the period of 12 months beginning on the day this section commences. (3) Without limiting subsection (1), the evaluation and report must consider: (a) the impact that the foreign investment reform Acts and their implementation have had on foreign investment in Australia and the broader Australian economy; and (b) whether the right balance is struck between welcoming foreign investment and protecting Australia's national interests. (4) The Treasurer must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the report is given to the Treasurer. (5) The Secretary must publish a copy of the report on the Department's website by no later than the day on which the report is tabled. 5 Delegation (1) The Secretary may, in writing, delegate the Secretary's powers or functions under section 4 to a person engaged under the Public Service Act 1999 who is employed in the Department. Schedule 1—Main amendments Part 1—Amendment of the Foreign Acquisitions and Takeovers Act 1975 Foreign Acquisitions and Takeovers Act 1975 1 Section 3 (paragraph beginning "This Act deals with") After "the action must", insert "in most cases". 2 Section 3 After: This Act deals with certain actions to acquire interests in securities, assets or Australian land, and actions taken in relation to entities (being corporations and unit trusts) and businesses, that have a connection to Australia. These actions are called significant actions. For an action to be a significant action, the action must result in a change in control involving a foreign person or be taken by a foreign person. insert: This Act also deals with actions taken by persons that have, or may have, implications for Australia's national security. These actions may or may not be significant actions. Actions relating to a national security business or national security land are notifiable national security actions. If an action is a reviewable national security action, or a significant action that is not a notifiable action or a notifiable national security action, the Treasurer may review the action if the Treasurer considers that the action may pose a national security concern. 3 Section 3 Omit "has taken a significant action", substitute "has taken an action". 4 Section 3 Omit "Some significant actions (called notifiable actions) must also be", substitute "Significant actions that are notifiable actions, and notifiable national security actions, must generally be". 5 Section 3 Omit "If a notice", substitute "Broadly, if a notice". 6 Section 4 Insert: AAT Act means the Administrative Appeals Tribunal Act 1975. 7 Section 4 (definition of acquire) Repeal the definition, substitute: acquire an interest of a specified percentage: (a) in a business—has the meaning given by section 19A; and (b) in an entity—has the meaning given by section 20. 8 Section 4 Insert: business includes any activity carried on by: (a) the Commonwealth, a State, a Territory or a local governing body; or (b) a body corporate established for a public purpose by or under a law of the Commonwealth, a State or a Territory; or (c) an entity wholly owned by the Commonwealth, a State, a Territory, a local governing body or a body corporate covered by paragraph (b). 9 Section 4 (definition of Commonwealth entity) Repeal the definition. 10 Section 4 (definition of constituent document) Repeal the definition, substitute: constituent document of an entity or unincorporated limited partnership means any rules or other document constituting or establishing the entity or partnership or governing its activities, and includes: (a) for a corporation—the constitution of the corporation; and (b) for a unit trust—the trust deed for the trust; and (c) for an unincorporated limited partnership—the partnership agreement. 11 Section 4 Insert: core Part 3 action means any of the following: (a) a significant action (other than an action mentioned in paragraph (b)); (b) any of the following actions: (i) a notifiable national security action that is not a significant action; (ii) an action in respect of which the Treasurer has given notice under subsection 66A(4); (iii) a reviewable national security action that is notified to the Treasurer. 12 Section 4 (definition of decision period) Omit "77(5)", substitute "77(8)". 13 Section 4 (definition of general meeting) Repeal the definition, substitute: general meeting of an entity or unincorporated limited partnership means: (a) for a corporation—a general meeting of the corporation; or (b) for a unit trust—a meeting of unit holders of the trust that is held in accordance with a constituent document of the trust; or (c) for an unincorporated limited partnership—a meeting of partners of the partnership that is held in accordance with a constituent document of the partnership. 14 Section 4 Insert: general partner means a partner of a limited partnership whose liability relating to the partnership is not limited. head has the same meaning as in the Office of National Intelligence Act 2018. 15 Section 4 (after paragraph (c) of the definition of interest) Insert: (ca) in an unincorporated limited partnership—has the meaning given by section 11A; and 16 Section 4 (after paragraph (d) of the definition of interest) Insert: (da) in a business—has the meaning given by section 16A; and 17 Section 4 (after paragraph (e) of the definition of interest) Insert: ; and (f) of a specified percentage in an unincorporated limited partnership—has the meaning given by subsection 17(2A). 18 Section 4 Insert: limited partner means a partner of a limited partnership whose liability relating to the partnership is limited. limited partnership means an association of persons that: (a) was formed solely for the purposes of becoming a partnership where the liability of at least one partner relating to the partnership is limited; and (b) is recognised under a law of the Commonwealth, a State, a Territory, a foreign country or a part of a foreign country as such a partnership. national intelligence community has the same meaning as in the Office of National Intelligence Act 2018. national security business has the meaning prescribed by the regulations. national security land has the meaning prescribed by the regulations. 19 Section 4 (definition of no objection notification) Repeal the definition, substitute: no objection notification means: (a) a written notification given under subsection 74(2) and includes such a notification as varied under section 74, 76 or 79G; or (b) a written notification given under subsection 75(2) and includes such a notification as varied under section 76 or 79G. 20 Section 4 Insert: notice imposing conditions means a written notice given under subsection 79H(1) and includes such a notice as varied under section 79J, 79P or 79Q. notifiable national security action has the meaning given by section 55B. reviewable decision means a decision of the Treasurer under Division 3 of Part 3 that a national security risk exists in relation to an action. reviewable national security action has the meaning given by Division 4B of Part 2. starts a national security business has the meaning given by section 8A. starts an Australian business has the meaning given by section 8B. 21 Section 4 (definition of substantial interest) Omit "entity or trust", substitute "entity, trust or unincorporated limited partnership". 22 Section 4 (paragraph (a) of the definition of substantial interest) Repeal the paragraph, substitute: (a) for an entity or unincorporated limited partnership—the person holds an interest of at least 20% in the entity or partnership; or 23 Section 4 (note 1 to the definition of substantial interest) After "entity", insert "or unincorporated limited partnership". 24 Section 4 Insert: Tribunal means the Administrative Appeals Tribunal. 25 At the end of subsection 6(3) Add: ; or (h) both of the following apply: (i) both are partners of a limited partnership; (ii) at least one of them is a limited partner that is not in a position (whether alone or together with one or more persons who are, or would apart from this paragraph be, that partner's associates) to participate in the management and control of the partnership, or of any of the general partners of the partnership, in relation to any matter. 26 At the end of section 8 Add: (3) Without limiting subsection (1), a business is taken to be an Australian business for the purposes of this Act if: (a) the business is carried on wholly or partly in Australia, whether or not in anticipation of profit or gain, by: (i) the Commonwealth, a State, a Territory or a local governing body; or (ii) a body corporate established for a public purpose by or under a law of the Commonwealth, a State or a Territory; or (iii) an entity wholly owned by the Commonwealth, a State, a Territory, a local governing body or a body corporate covered by subparagraph (ii); and (b) the business would, or could, be carried on in anticipation of profit or gain if it were carried on by someone other than: (i) a body referred to in subparagraph (a)(i) or (ii); or (ii) an entity referred to in subparagraph (a)(iii); or (iii) a foreign government; or (iv) a separate government entity. 27 After section 8 Insert: 8A Meaning of starts a national security business (1) A foreign person starts a national security business if the foreign person starts to carry on a national security business. (2) Despite subsection (1), if a foreign person carries on a national security business, the person does not start a national security business merely because the foreign person, alone or together with one or more persons, establishes a new entity: (a) that carries on the same national security business; or (b) for the purposes of acquiring interests in assets of the same national security business. 8B Meaning of starts an Australian business (1) A foreign person starts an Australian business if: (a) the foreign person starts to carry on an Australian business; or (b) for a foreign person who already carries on an Australian business—the business starts a new activity that: (i) is not incidental to an existing activity of the Australian business; and (ii) is within a different Division under the Australian and New Zealand Standard Industrial Classification Codes from the current activities of the Australian business. (2) Despite subsection (1), if a foreign person carries on an Australian business, the person does not start an Australian business merely because the foreign person, alone or together with one or more persons, establishes a new entity: (a) that carries on the same Australian business; or (b) for the purposes of acquiring interests in assets of the same Australian business. 28 Subsection 9(1) (note 2) Omit "and trusts", substitute ", trusts and unincorporated limited partnerships". 29 At the end of section 9 Add: Buying‑back securities (6) The buying‑back of a security in an entity by the entity does not constitute an acquisition by the entity of an interest in a security in the entity. 30 Sections 10 and 11 (note 2) Omit "and trusts", substitute ", trusts and unincorporated limited partnerships". 31 After section 11 Insert: 11A Meaning of interest in an unincorporated limited partnership A person holds an interest in an unincorporated limited partnership if the person: (a) is in a position to control all or any of the voting power or potential voting power in the partnership; or (b) is entitled to any or all of the distributions of capital, assets or profits of the partnership on the dissolution of the partnership; or (c) is entitled to any or all of the distributions of capital, assets or profits of the partnership otherwise than on the dissolution of the partnership. Note: See also section 19 (tracing of substantial interests in corporations, trusts and unincorporated limited partnerships). 32 Paragraph 15(4)(a) Repeal the paragraph, substitute: (a) Part 4 (notices required for notifiable actions and notifiable national security actions, and may be given of other actions); 33 Subsection 15(5) (note) Repeal the note, substitute: Note: As a result of this subsection, the person acquires or sells the interest only when the provisions become binding. If the provisions do not become binding until one or more conditions are met, and one of those conditions is met only when the Treasurer has given an exemption certificate or no objection notification, then the person does not acquire or sell the interest before the Treasurer has given an exemption certificate or no objection notification. 34 After section 16 Insert: 16A Meaning of interest of a specified percentage in a business A person holds an interest of a specified percentage in a business if the value of the interests in assets of the business held by the person, alone or together with one or more associates of the person, is that specified percentage of the value of the total assets of the business. Note 1: See also paragraph (a) of the definition of acquire. Note 2: A percentage may be specified by referring to: (a) "20%"; or (b) "any percentage"; or (c) a "direct interest"; or (d) a percentage that a person holds in other assets. 35 Section 17 (at the end of the heading) Add "or unincorporated limited partnership". 36 After subsection 17(2) Insert: Meaning of interest of a specified percentage in an unincorporated limited partnership (2A) A person holds an interest of a specified percentage in an unincorporated limited partnership if the person, alone or together with one or more associates of the person: (a) is in a position to control at least that percentage of the voting power or potential voting power in the partnership; or (b) is entitled to at least that percentage of the total distributions of capital, assets or profits of the partnership on the dissolution of the partnership; or (c) is entitled to at least that percentage of the total distributions of capital, assets or profits of the partnership otherwise than on the dissolution of the partnership. 37 Subsection 17(3) After "entity", insert "or unincorporated limited partnership". 38 After section 18 Insert: 18A Increasing percentage of interests without acquiring additional interests in securities Effect of increase—person is taken to take an action of acquiring an interest in securities (1) A person is taken to take an action of acquiring an interest in securities in an entity if: (a) the person holds an interest of a particular percentage in the entity; and (b) the percentage interest that the person holds increases without the person acquiring interests in securities in the entity. Note: The combined effect of this subsection and other provisions of this Act may be that the person takes: (a) a significant action because of paragraph 40(2)(a) or (b) or 43(a) or section 44; or (b) a notifiable action because of paragraph 47(2)(a), (b) or (c) or section 48; or (c) a notifiable national security action because of paragraph 55B(1)(c) or (d); or (d) a reviewable national security action because of paragraph 55D(1)(a) or 55F(a). Effect of potential increase—person is taken to propose to take an action of acquiring an interest in securities (2) A person is taken to propose to take an action of acquiring an interest in securities in an entity if: (a) the person holds an interest of a particular percentage in the entity; and (b) there are reasonable grounds to believe that the percentage interest that the person holds may increase without the person acquiring interests in securities in the entity. (3) Paragraph (2)(b) applies whether or not any person actually has the belief mentioned in that paragraph. Modification of this Act (4) The following table has effect: Increasing percentage of interests without acquiring additional interests in securities—modification of this Act Item The following provisions of this Act … apply in relation to an action or proposed action that is taken to occur because of subsection (1) or (2) of this section as if … 1 subsection 20(1) (meaning of acquire an interest of a specified percentage in an entity) subsection 20(1) provided that the taking of the action resulted in the person acquiring an interest in the entity of the percentage that the person holds immediately after the action is taken. 2 paragraphs 47(2)(a) and (b) (meaning of notifiable action) those paragraphs only applied where the foreign person did not hold a direct interest or substantial interest (as the case requires) in the entity immediately before the action is taken. 3 item 1 of the table in section 51 (threshold test—acquiring a direct interest in an Australian entity that is an agribusiness) the value mentioned in column 2 of that item were the total value, immediately after the action is taken, of all interests held by the person, alone or together with one or more associates: (a) in the entity; or (b) previously acquired from the entity. 4 paragraph 55B(1)(c) (meaning of notifiable national security action) that paragraph only applied where the foreign person did not hold a direct interest in the entity immediately before the action is taken. 5 subsections 67(2) and 69(2) (orders) subsections 67(2) and 69(2) authorised the Treasurer to make (subject to subsection (5) of this section) an order directing the person to do within a specified period, or refrain from doing, specified acts or acts of a specified kind, and no other kind of order. 6 subsection 69(5) (extension of periods specified in certain disposal orders) subsection 69(5) applied in relation to an order made under subsection 67(2) or 69(2), as those subsections apply because of item 5 of this table. 7 section 77 (time limit on making orders and decisions) subsection 77(3) were omitted and column 2 of item 1 of the table in subsection 77(6) referred to the following events: (a) the Treasurer receives a notice from a person stating that the action is proposed to be taken, before the action is taken; (b) the Treasurer receives a notice from a person, stating that the action has been taken, before the end of 30 days after the action is taken. 8 subsections 79D(2) and 79E(2) (orders—last resort powers) subsections 79D(2) and 79E(2) authorised the Treasurer to make (subject to subsection (5) of this section) an order directing the person to do within a specified period, or refrain from doing, specified acts or acts of a specified kind, and no other kind of order. 9 subsection 79E(4) (extension of periods specified in certain disposal orders made in exercise of last resort powers) subsection 79E(4) applied in relation to an order made under subsection 79D(2) or 79E(2), as those subsections apply because of item 8 of this table. 10 items 1 and 2 of the table in subsection 101AA(3) (threshold for distinction between tier 2 infringement notices and tier 3 infringement notices) the value for the action mentioned in the relevant item were the total value, immediately after the action is taken, of all interests held by the person, alone or together with one or more associates: (a) in the entity; or (b) previously acquired from the entity. 11 (a) section 15 (interests acquired by entering agreements or acquiring options); those provisions were omitted. (b) section 68 (interim orders); (c) subparagraph 74(1)(c)(iii) (no objection notification imposing conditions); (d) paragraph 79A(3)(b) and subsection 79A(4) (notice of national security review prohibits taking of action until review completed); (e) section 85A (offence for taking action while prohibited by this Act); (f) section 92A (civil penalty for taking action